Democratizing Entrepreneurship: Online Documents, Tools, and Startup Know-How

Abstract

New ventures are inherently cash-strapped. The founders who start them are typically doers — problem-identifiers and solvers who are great at finding ways to get things done within given constraints. For most entrepreneurs, the legal formalities associated with new ventures are a low priority at best and an ignored bureaucracy at worst. No startup wants to expend scarce resources on what it perceives as legal formalities. Online tools have recently emerged to help address this issue by making it easier for entrepreneurs to comply with the formalities associated with forming new businesses and raising capital. More importantly, these tools also democratize access to legal documents and startup know-how for all types of entrepreneurs. The open-sourced documents and technology platform allow ventures outside entrepreneurial epicenters, such as Silicon Valley, New York, and Boston, to utilize the same documents (and know-how) routinely used by new ventures that are advised by the most experienced startup counsel. Some practices will not fit all types of ventures. However, several additional ventures may benefit from granting equity to team members, making that equity subject to vesting, and utilizing two-tier stock structures. These resources can empower more ventures to implement these practices.

Keywords: Startups, Venture Capital, Emerging, Online, Do It Yourself, Silicon Valley, Wizard, Legal Tech, Technology, Web, Portal, Automation, Formation, Forms, Document, Self-Help

JEL Classification: K12, K22, K19, O3